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F&S sees room for solar energy growth in SA - 4 February 2009

The recently -announced R60-million support for renewable energy from the Danish government should open up investment opportunities in South Africa’s solar energy market.

The consultancy noted that while the potential for solar in Africa was quite significant, the uptake of technologies had remained limited owing to the cost of the equipment.

“The support from Denmark is an important development in the South African renewable energy sector,” said Frost & Sullivan energy industry manager Cornelis van der Waal.

“Projects that were previously unfeasible can now be developed. This will hopefully change people’s mindset about renewables in Africa, and encourage more projects.”

With the increased Danish support, Van der Waal hoped that increased efforts would be directed at projects such as running traffic lights from solar power and installing solar panels in new housing developments. This would alleviate some of the strain on the national grid.

“In South Africa, solar energy is still primarily used for off-grid applications,” he said. “This is because of the lack of a feed-in-tariff for individual users. On a commercial scale, wind is certainly more attractive than solar, simply because of the magnitude of the electricity that can be generated through wind.”

Frost & Sullivan noted that there was still a lot of open space that was not used for solar power, for instance on rooftops for photovoltaic panels or solar water heaters. The major reason that private individuals and institutions were not taking advantage of this though, was the lack of incentives.

“The biggest challenge in the solar market in South Africa has been the lack of government support for individuals to purchase equipment and supply any excess power they might generate to the grid,” noted Van der Waal. “In countries like Germany and Spain, government support for this approach has been significant.”

While the National Energy Regulator of South Africa (Nersa) has proposed such a structure, the suggested feed-in-tariffs may not be high enough to stimulate significant interest, Frost & Sullivan said.

There were also no clear indications of when these would be implemented. The government’s targets for having 3% of all power generated by renewable sources by 2013, has also been criticised for not being ambitious enough.

With additional funds available for renewable energy projects, Frost & Sullivan believed that more could be done to encourage solar options. There was scope to create a win-win situation in which consumers reduced their electricity bills, the demand for power from State-owned electricity producer Eskom was reduced, and government promoted sustainable, green power generation.